Mixing Friends and Business: Great Chemistry or Recipe for Disaster?

Hewlett and Packard. Ben and Jerry. Larry and Sergey. History is full of stories of pals who became successful business partners. Then there are the many, many others. You’ve never heard of them, for a reason. Things didn’t work out so well.

Mixing business and friendship can be key to your success or a total nightmare. But it’s something every founder will have to deal with at some point.

Maybe you know what makes up the perfect founding team, you know what roles you need to fill, and now you just need to find the right co-founder. Or maybe your startup is expanding and you’re just looking to make your next hire. You gotta decide.

This is one of the more divisive questions among the entrepreneur community. Each side of the debate has seasoned experts with case studies that lead them to swear on their lives that their way is the right way.

But ultimately, the only question that matters is whether this is the right way for you.

Mixing friendship and business is something that has its own unique set of challenge and difficulties. Yet combining the two could be one of the best moves for your startup. This article will help you sort through the good and the bad, find the path that’s right for you, and advise on how to proceed should you decide for your worlds to collide.

Is it worth mixing friends and business?

According to the Bureau of Labor Statistics the average American spend 8.9 hours a day at work. However, a UK study found that entrepreneurs, on average, will spend 63% more time at work than others, working anywhere between 52 to 62 hours a week. I’m sure such a number will sound familiar to many of you reading this article.

The point is, we spend a hell of a lot of time at work, meaning the people you work with are going to be a huge part of your life whether your like it or not. It has been proven that the quality of your relationships with your co-workers greatly influences the quality of your work.

Aside from happiness and quality of work, there is one other big reason people tend to bring friends into the fold, and it’s quite simple really. You trust them. After all, if you can’t trust your friends and family, then who can you trust?

Because half the battle of working well with someone is developing trust, it’s only reasonable to want to eliminate that half of the equation from the get-go. Make no mistake, trust is an incredibly valuable thing when it comes to building a business.

In fact, there have been many instances where that trust, something that can only be created after years of knowing one another, has been the key ingredient for successful businesses.

You only need to take a look at founding teams like Larry Page and Sergey Brin of Google, or Bill Gates and Paul Allen of Microsoft. For a more recent example, there’s Justin Kan and Emmet Shear of Twitch.tv. There are many more amazing case studies where lifelong best friends came together to build smash-hit startups. Their trust in one another got them through all the tough times and allowed them to become successful entrepreneurs.

However, it’s also because of that trust that things can go very wrong, very quickly.

The thing about trust is that it can make you blind to someone’s faults. You’ll often see them with rose-tinted glasses, and unconsciously overlook flaws or give a free pass to mistakes they might make. This is dangerous, especially if you have other employees who aren’t friends. Once they see you playing favorites, morale immediately lowers, your business loses productivity, and performance falls.

“We might praise a regular employee for a particular task, but a family member employee will have to perform the same task to a higher degree to earn that same praise. While this might not seem fair to the family member, it’s better for overall company morale to ensure there is no favoritism to family members.” – Clate Mask, CEO and cofounder of Infusionsoft.

Also, while a team comprised of friends can have many benefits at the start, in the long run it just might not work out.Teams made up of friends tend to have similar skill sets or perspectives, which can be dangerous, since you absolutely need diversity as part of your startup team.

Then there’s the fact that the friendship itself might not last. For as many stories as there are about friendships that became stronger as a result of business partnerships, I guarantee there are more stories of friendships broken beyond repair because of all the stress that a startup brings.

“Not all of my friends would be a good fit for our culture, and that’s fine, but those who have been a fit understand that friendship isn’t a substitute for accountability. Hiring or starting a company with friends is not a choice I would make lightly, however the implicit trust and chemistry is invaluable if you can make it work.” – Joshua Backer, cofounder of United Social.

Yin and Yang, or Blood and Guts?

A recent study found that, through observing different entrepreneurial teams over five years, the number one factor that keeps a team together is the compatibility of working styles. It found that the personality types didn’t matter as much as their ability to work together, especially when it comes to productivity and performance.

This is why strangers can often work together just as well as friends, because in a startup setting what matters isn’t necessarily how well you get along with one another on a personal level, but compatibility in the way you work.

Just because you can help someone move into a new house doesn’t mean that you will have a great working relationship with them. That’s especially true in a high-pressure environment like a startup, where you’re expected to spend at least 50 hours a week together on a face-to-face basis.

A lot of people have two identities, their social self and their professional self. Unless you’ve worked with someone before, don’t expect to understand how they are in a professional setting. For all you know, the super straight-laced friend who’s always on time can also be an insufferable micromanager.

Do yourself a favor, and instead of bringing your best friend on board right away, try to get a sense of how they are in a professional setting. The best way to do this is to work together on a small project, something with low stakes, to see just how committed they are to a project and their style of working. If you’re not impressed or you don’t click, there’s no reason to move forward with a business relationship.

“I’ve worked with my longtime friend Murray Newlands for several years now. I recommend that anyone in this situation start by working on a project or two together. This makes it easier to get to know if you’ll work well together. Much like a spouse, this is a person you’re going to be working countless hours with on a project that will have ups and downs, so make sure you don’t get into a business relationship with someone you don’t trust.” – John Rampton, founder of Due.

That whole trust thing just keeps coming up, and for good reason.

According to David Horsager, author of The Trust Edge, there are eight pillars that make up trust. They are: consistency, clarity, compassion, character, contribution, competency, connection, and commitment. If your business relationship lacks these things then get out quick.

We need to talk…

I have yet to meet anyone who enjoys those strained conversations where you’re not sure if you’re giving the appropriate amount of eye contact for the situation, but you don’t want to be looking at your feet either. Unless of course you’re a hairdresser, then you have that awkward interaction thing down pat.

Most people would assume that just because you have a history with someone, it’ll be easier to have the difficult conversations. Most people would be wrong. The one thing you really have to ask yourself is whether or not you’re going to be putting the business first, or the friendship first.

The drawback of working with friends is that it can be difficult to separate the social from the professional. Conflicts at work can easily spill out into the personal realm. One bad argument over logo design and next thing you know someone conveniently forgets to bring the potato salad to the next picnic.

But in all seriousness, it’s dangerously easily for grudges to develop at work, to feel like comments about your professional work are a personal attack. Which is why you need to have the difficult conversations early. Think of it as having a pebble in your shoe. Sure at the start it’s a little bit annoying but you figure you can ignore it. It’s not until you’re walking around for hours that it starts to hurt and you’re wondering why you just didn’t take it out in the first place. That’s what these small issues are like to business relationships. Deal with them now or have them become an insufferable pain point later down the road.

Check the ego at the door and start drawing up boundaries between when you’re in work mode and when you’re in friend mode. If you don’t learn how to communicate with one another effectively from the very start, then you’re going to end up with both a broken business and a broken friendship.

So get to talking, preferably with a lawyer’s advising, and start airing out the dirty laundry before it has a chance to have its smell linger forever. Here are some topics that you’re going to need to get out in the open. It might touch a raw nerve here and there but this is vital if you’re going to be bringing on anyone, let alone a friend, as a cofounder.

Who’s the boss? First and foremost define your roles. Who is the designated leader? Business is not a democracy, you pick one person and you trust them to lead you and make the final decisions. It can be prickly suddenly having your friend as a boss, and vice versa, but get used to it, and quickly.

Let’s talk money. One thing you’ll quickly have to come to terms with is that money changes everything. Be honest, who’s more valuable to the team? Check out the Co-founder Equity Calculator if you’re stuck on where to start with equity.

Ride or die. Okay so die might be a little extreme, but the point is that you have to make sure that everyone is on the same page when it comes to values and motivation. Is everyone in it for the long haul? Is it going to be full-time? Startups usually take three years to get off the ground, so you better start planning on what it is you want to do.

What’s the protocol? Inevitably there will be conflict and feelings will get hurt, so start setting up ground rules for how you’re doing to deal with it. Don’t naively assume that you two are just going to talk it out and everything will be okay. If you need to set a time-out period of a couple days so cooler heads can prevail then do it, it’s about the business not your egos.

A couple more tips to help along your way. I highly recommend taking the DISC test to find out your own personal communication style, and see how well that gels with your partner’s. I also recommend reading the book Difficult Conversations, which will give you a good idea of what it is you need to talk about and how to face the tough issues before they get out of control.

Conclusion

There is a fine, tricky line when it comes to mixing friends and business. It can either go very right or very wrong depending on the circumstances. The main thing to remember is, it’s not something that can be decided with some common wisdom. It typically boils down to the people involved, and the way you go about it if you head down that road. The things to keep in mind:

Make sure there’s a bond of trust, but don’t let that trust blind you to problems.

Diversity in a founding team is crucial—don’t partner up with a clone of you.

Hope this helps you find the Ben to your Jerry, the Hewlett to your Packard, the John to your Paul, Foundr family. And remember to leave your thoughts on mixing business and friendship below in the comments!

Jonathan, I personally don’t want friends involved. But then I don’t want anyone else involved either. I would like to read how you can expand your solo business with one or two more persons. Thanks for writing this was very helpful to clear my doubts.

Thank you so much for this article…I have my best friend whom we both see each other as brothers but he is laid back in effort and input in the business just cos he knows I’m an Up and doing person and very resourceful and always get the job done, also he mixes the business with sentiments and friendship by inducting his other friends who I clearly see them not properly self-motivated possibly due to the familiarity as friends they have with him and thereby forcing me to align with them which is not working for me because they don’t put in much work and don’t even acknowledge my presence neither equally loyal to me since I didn’t bring them in or accountable to me and my friend/business partner keeps backing them up bluntly and ignoring the dangers and possible negative effect it might have on the growth and success of our business, please advise me what to do about this difficult situation, thank you

I don’t know if it’s a common trait, but I enjoy reading articles that challenge me to think of circumstances in a new way, ones that force me to suspend pre-conceived notions. This article certainly did that for me!! Thanks for creating it!

My personal experience is that not worth it at all! Because I’m a chill person and when I did this with a mate… Deadlines were never met, and I was losing it with sleep because of this. If you are going to have friends in the business, you better have them in business first before you become friends. So standards are met.

Truth. It is very important that you hire someone because of their skills first and not because of your relationship with them. Hopefully you’re not in such a bad situation anymore @nicolasganea:disqus

This is soooo spot on. Just been through such a situation. I immediately cut it down stop all business negotiations. I have stopped the “Storming bull” in its tracks before it trample me into frustration. I did not allow “bullish tactics”. I did not allow take over and send them away with the white flag. “If that is your way of doing things (presenting something) – then pls go ahead and do it your way. This is not how I am operating. Definitely not!! Professional knowledge, background experience are factors absolutely crucial aspects to take in account. These factors will lead to immense frustration.

Having a bad business partner, I think, is worse than a having a bad friend. A bad friend you can sort of ignore and get time away from, whereas having a bad business partner means they could tank your whole livelihood if they’re not careful.